Prepaid Mobile Conference - Budapest , Sept 27th 1 How to build Prepaid users ARPU (and loyalty) with innovative and segmented offers

Prepaid Mobile Conference - Budapest , Sept 27th 2 French Mobile Telephony Market : penetration still behind rest of Europe Penetration rates and subscriber base in Western Europe July 1st, 2004 (million)

Prepaid Mobile Conference - Budapest , Sept 27th 3 French Prepaid Segment : well behind rest of Europe Prepaid / Postpaid Mix in Western Europe July 1st, 2004

Prepaid Mobile Conference - Budapest , Sept 27th 4 French Mobile Telephony Market Evolution Subscribers growth in France – prepaid/postpaid mix

Prepaid Mobile Conference - Budapest , Sept 27th 5 Bouygues Telecom Suscriber Base Evolution* * Excluding B to B

Prepaid Mobile Conference - Budapest , Sept 27th 6 French Pre-Paid Market : uncertain economics ARPU : Around 15 € (more than half of post-paid packages) Loyalty : Uncertain churn rate but believed to be significantly higher than post-paid packages SAC : Significantly declined over the last 2 years but remain under tight control

Prepaid Mobile Conference - Budapest , Sept 27th 7 As a result, highly priced but very basic offers and services Handsets not subsidized (>100 € price difference vs post- paid) Price per minute high (3 to 4 times higher than post-paid) Not all services available (e.g. I-Mode) Very limited loyalty reward programs

Prepaid Mobile Conference - Budapest , Sept 27th 8 However, french Pre-paid users are extremely diverse Pre-Paid offers Only pay for what is consumed No contract No commitment Budget ControlDiscretion Cash payment Budget Flexibility

Prepaid Mobile Conference - Budapest , Sept 27th 9 Also, the French pre-paid market is moving from a prospect market to a churner market Churners 60 % Prospects 40 % - Budget « controllers » - Budget « constrained » - « Freedom » seekers - Kids - Senior people

Prepaid Mobile Conference - Budapest , Sept 27th 10 Bouygues Telecom : creativity and segmentation to better address pre-paid users Launch of 3 different pre-paid offers that allow consumers to double their communication potential  Flash (mars 2004)  Spot (avril Sept 2002)  Night and Week-End (not exclusive)

Prepaid Mobile Conference - Budapest , Sept 27th 11 Flash :The best deal for high users Consumers who choose Flash get :  Half-price on price/min  Half-price on SMS In return the validity of their credit is also reduced by half

Prepaid Mobile Conference - Budapest , Sept 27th 12 Spot : The best deal for constrained budgets Consumers who choose Spot get :  Additional free minutes to call fixed lines and other Bouygues Telecom lines (free minutes amount is the same as topped-up minutes)  Each time they use these minutes they listen to a 20s advertising before getting through to their correspondant  They always have the choice to use regular minutes (no ads) or free minutes (with ads) In return they have to fill in a short qualification form (paper, web, phone)

Prepaid Mobile Conference - Budapest , Sept 27th 13 Very encouraging results to date Nomad gained share since launch of Flash (estimated 1-2 points) Acquisitions volume is up + 18% since launch of Flash although market is estimated to be up 7% on the same period 35% of Nomad base on these segmented offers (June 2004) 45% of Nomad ARPU delivered by the segmented offers Lower churn rate (Spot)

Prepaid Mobile Conference - Budapest , Sept 27th 14 Focus on Flash : High value offer An offer which very quickly found its target  Launched March 1, 2004  > 200M suscribers  years suscribers  Very high SMS users (x 8 vs regular Nomad)  Very high voice users (x 4 vs regular Nomad)

Prepaid Mobile Conference - Budapest , Sept 27th 15 Focus on Spot : A win/win/win service CustomerBouygues Telecom - Free minutes - Targeted advertising - Special offers - Higher Arpu (+30 %) - Lower churn Rate (-1pt) -Well qualified base -Specific Segment (15-20 years) Advertizer - Qualified prospect - High quality contact - Flexibility of campaigns

Prepaid Mobile Conference - Budapest , Sept 27th 16 Conclusion Prepaid is full of opportunities due to the diversity of users Key is to be able to segment the base and design offers to specific groups… … but of course watch out for increased complexity